When a Wallet Is No Better Than a Ziploc

Mobile Payments ▶ Many startups aren’t properly securing their users’ data ▶ “There’s a lot of two engineers and a goat”

“I am hoping my kids don’t do it,” says Sarah Jane Hughes. The Indiana University at Bloomington professor of commercial law isn’t alluding to sex or drugs. She’s talking about the dangers of mobile payments services, a subject that brought her to Capitol Hill in December for a congressional hearing. She’s not the only one sounding an alarm: In September almost half of about 900 members of Isaca, an association of IT professionals and risk managers, said mobile payments aren’t secure.

In 2016, 148 million people around the world will reach for their handsets to make payments at in- store point- ofsales terminals, according to a report from Juniper Research. Many millions more will use payment apps such as Dwolla or Venmo to send money to friends and businesses.

The boom is creating opportunities for hackers and thieves, and security gaps in some of the apps are leaving buyers as well as sellers exposed. According to a September report by researcher Lexisnexis, merchants reported that “alternative payment methods,” a category that includes Paypal and other nonbank financial companies, accounted for 21 percent of all fraud in 2015, up from 13 percent the previous year.

Along with a handful of well-known companies such as Apple, Google, and Samsung, the mobile payments